HUGE BUSH
STOCK SLEAZE
SCANDAL!!!

LAWBREAKER-IN-CHIEF!

Dubya Broke Law Often, Reaped Big $$$

But Poppy's SEC Shut Down Probe

Cover Up Completed to Protect Dubya?

The Full Story Of Dubya's Rip-Off Scam


(WASHINGTON, D.C., July 2, 2000: Special to MWO) In a shocking new development in the mounting corporate corruption scandals, it has been revealed that George W. Bush violated securities regulations at least four times in the 1980's and 1990's -- including one violation that occurred while Bush was completing precisely the sort of stock-dump swindle which his Enron executive buddies allegedly pulled off last year.

The Securities and Exchange Commission discovered aspects of Bush's rip-off at the time.  An internal SEC report, dated April 9, 1991 and later obtained and  released by the Center for Public Integrity, noted that Dubya had established a pattern of violating SEC reporting regulations. The report also announced that SEC investigators had opened an investigation into Bush's insider stock dumping the year before. 

But suddenly, under then-President George H.W. Bush's hand-picked SEC chairman, the agency halted its probe of Dubya, brought no charges, and deep-sixed the case.

Now, in light of George W. Bush's denunciation of exactly the sort of practices that he himself used to build his fortune, the Bush Administration is in deep crisis.

Washington political observers are saying that only a full-scale probe of Bush's past corporate criminal activities -- and the possible cover-up of those activities by his father's appointees -- can restore confidence in Dubya's shaken administration.

The case goes back to the younger Bush's involvement with the Harken Energy Corporation twelve years ago.

Here's the full story:

Dubya and Harken Energy: The SEC Cites First Wrongdoing

In 1990, Bush was a member of Harken's board of directors and one of two members of its audit, fairness and special committees.  (Harken had bought Bush's failing oil company, Spectrum 7, for $2 million in stock, even though Spectrum was a big money loser.)  Bush and another director, E. Stuart Watson, served on Harken's "fairness committee" to determine whether a restructuring of the company  would adversely affect ordinary shareholders.

Harken's annual report for 1989 showed a profit of $8 million on the sale of its subsidiary, Aloha Petroleum.  Aloha was sold to a partnership of Harken "insiders" called International Marketing & Resources (IMR) for $12 million -- $11 million of which was financed through a note held by Harken.

When SEC accountants eventually discovered that Harken had concealed its 1989 losses by claiming a profit on the sale (despite the fact that Harken held the note on the sale) the Commission objected, saying that the income could only be recognized when the principal on the loan was paid.

The Arthur Andersen Connection

According to their SEC Proxy statement on May 1, 1991, Harken Energy Corporation had employed Arthur Andersen & Co. for accounting services since  1976 and the Harken audit committee, including Bush, met with auditors from Arthur Andersen.  The Proxy statement stated, "Arthur Andersen & Co. has  continuously served Harken as independent auditors since 1976."  A July 25,  1991 letter from the Securities and Exchange Commission asked for Harken to "Identify the representatives of Arthur Andersen & Co., Inc. present at the  June 11, 1990 meeting of Harken's Audit Committee."

In a December 6, 1990 letter to Harken Energy Corporation, the SEC asked why  Harken and the company's independent auditors -- Arthur Andersen -- qualified  the sale of Aloha Petroleum as a capital gain.  The SEC letter asked Harken  to provide additional information about "The financial statement of IMR which were relied upon in the Aloha transaction that enabled the Company and its  independent auditors to reach the conclusion that the collection of the note from IMR was reasonably assured at the time of sale."  The SEC also asked for  Harken to "Describe any plans, arrangements or understandings which obligated Harken to provide financial support to Aloha on an ongoing basis and the consideration that was given by Harken and its independent accountants in determining that full gain recognition was appropriate."

After the SEC discovered Harken's concealment of real losses, Harken was forced to amend its 1989 annual report.  The amended filing declared that Harken's 1989 losses were actually $12,566,000, rather than the $3,300,000 loss it had earlier declared.

What Did Dubya Know?  Everything
When Did He Know It?  In Plenty of Time

Harken director E. Stuart Watson said both he and Bush were aware of Harken's finances.  "You bet we were. ... We were both trying to keep that company on the straight and narrow," Watson said.  According to the Dallas Morning News, Watson said, "they [Watson and Bush] were kept current on the company's finances and knew that losses were to be announced."  Watson added that earnings reports at Harken "were never a surprise to us."  Watson said that, as members of the audit committee, he and Bush were briefed by the company treasurer and the inside and outside auditors.

Bush the Inside Trader: Dubya Dumps His Harken Stock

On June 22, 1990, Bush sold 212,140 shares (66%) of Harken stock, which was valued at $4 per share; two months before Harken announced losses in its results for the June 30 quarter.  The value of Harken's stock fell to $2.37 per share immediately following the announcement of losses and was trading at only $1 by the end of the year..

Before selling his stock, Bush was informed that the firm was suffering a cash "crisis."  According to the Associated Press, "As a Harken director, he [Bush] received memos in  spring 1990 that referred in stark terms to the company's cash-strapped condition as banks demanded it pay down its debts.  One document said the company was in the midst of a 'liquidity crisis' and another told Bush the company was 'in a state of noncompliance' with its lenders.".

Dubya Tries To Hide Big Rip-Off Profit

Bush's sale of Harken stock returned nearly $850,000- a 200% profit, but he failed to report the transaction until March of 1991, a violation of SEC rules.  Bush contended the SEC had misplaced the report.  According to SEC spokesman John Heine, "As far as I know, nobody ever found the 'lost' filing." [Time, 10/28/91]

Responding to new documents that show Bush was aware of Harken's financial "crisis," Bush lawyer Robert Jordan said, "By the time Bush sold his stock, the cash crisis had been largely resolved. ... By May 21, 1990, the major shareholders had agreed to a credit agreement which put $26 million into the company immediately."  But Harken needed a "cash infusion of $38 million... to maintain minimum operational flexibility" - meaning that even with the $26 million credit agreement, Harken still needed $12 million.

Internal Harken Energy documents noted that the company's immediate cash needs [were] at a crisis "survivor" level in May 1990 - just weeks before Bush dumped 212,000 shares of Harken stock.  An internal Harken Energy Corporation "Analysis of Cash Needs" dated May 4, 1990 and covering May 1 - July 31 indicated that Harken needed a cash infusion of $30 million to "maintain survivor status, pay past due payables of $2 million and rebuild working capital of $3 million."  In order to maintain "minimum operations," the company needed a "cash infusion of $38 million ... to maintain minimum operational flexibility."

The S.E.C. Investigates -- Then Stops

On April 9, 1991, SEC officials Herbert F. Jannick III, Lewis J. Mendelson, and James B. Adelman filed a report, exposing Bush's failure to comply with S.E.C. disclosure requirements not once but on at least four occasions in the 1980's and 1990's.

The officials also announced that the SEC staff had undertaken an investigation into Bush's windfall profit insider sale of 212,000 shares of Harken stock in July 1990, two months before Harken publicly announced its huge losses.

What then occurred remains something of a mystery. Commonly, the SEC seeks court injunctions against repeat disclosure violators, barring them from repeating the offense. And the stock dump sale could have lead to more serious criminal charges, along the lines currently being discussed with regard to the directors of Enron and WorldCom.

But the SEC, then overseen by a George H.W. Bush appointee, neither issued an injunction nor, it appears, followed up on the stock-dumping probe.  The entire matter was deep-sixed until the Center for Public Integrity rediscovered it during the 2000 campaign.

George W. Bush, Lawbreaker: Before and After the Enron Scandal

Before:   Bush failed to comply with SEC rules in reporting his June 1990 sale of Harken stock until March 1991.  Bush contended the SEC had misplaced the report.  According to SEC spokesman John Heine, "As far as I know, nobody ever found the 'lost' filing."

After:   In March 2002, Bush outlines a ten point plan on corporate reform. Bush said, "Corporate officers should not be allowed to secretly trade their company's stock. Every time they buy or sell, they should be required to tell the public within two days," Bush said.

Before:  Harken director E. Stuart Watson, a former executive for oil giant Atlantic Richfield, calls Harken's deals 'convoluted' and difficult even for industry veterans to grasp.  Says Harken founder Phil Kendrick, still a small shareholder: 'Their annual reports and press releases get me totally befuddled.  There's been so much promotion, manipulation and inside dealmaking.  It's been a fast numbers game.'  Some former executives charge the firm with routinely inflating its assets to make its balance sheets look better.  Harken's longtime chief executive, Mikel Faulkner, insists the operation is 'clean.'  But Faulkner, an accountant, offers this advice for those trying to decipher Harken's financial statements: 'Good luck.  They're a mess,'" according to Time magazine

After:   In a statement further detailing his plan for corporate responsibility, Bush said, "The SEC should ensure that public companies are responsible for providing investors a  true and fair picture of themselves, and that this information is provided in 'plain English.'  A company should disclose information in its control that a  reasonable investor would find necessary to assess the company's value, without compromising competitive secrets.  Today, disclosure practices have fallen behind the advanced techniques of corporate finance, allowing some firms to conceal the true risks faced by investors."

In short, Bush and Harken look as if they were guilty of precisely the irresponsible and possibily illegal activities that Bush now says he wants to eliminate.

As a result of those activities, Bush parlayed his Harken profits in order to buy the Texas Rangers baseball team -- an acquisition that eventually made him a multi-millionaire.  All of which would have been impossible without his apparent participation in the insider Harken pump-and-dump scheme.

The Bottom Line:

-- In 1991, the SEC found a pattern of repeated securities laws violations by George W. Bush in the 1980's and 1990's.

-- The SEC also began an investigation into Bush's insider "pump-and-dump" Harken scheme, which eventually made Bush a multi-millionaire.

-- The SEC, for reasons still unknown, sought no injunction against Bush for the disclosure violations and shut down its probe about his Harken stock sale.

Questions for Congress and the Press

As a result of these revelations, a number of monumental questions have arisen about the possible stock crimes of George W. Bush -- and the possible cover-up of those crimes by his father's administration.

But the really big question at the moment is -- will Congress and the press pursue these grave and disturbing questions?

In 1994, Congress and the press jumped into an alleged scandal known as Whitewater, involving a relatively piddling amount of cash -- a story instigated by the accounts of a disgraced Bill Clinton hater named Hale and a drug-addicted con-man and former Clinton associate named McDougal.

The land deal in question dated back to the late-1970's -- more than fifteen years prior to the investigation's start.

When the "scandal" was proved to be an utter phony in the Resolution Trust Corporation report in 1996, the press, led by the Washington Post, suppressed the news, and the Whitewater investigation continued. 

After tens of  millions more of the taxpayers dollars were wasted, after a partisan-led impeachment drive, after countless thousands of fake news stories (many based on leaks from Clinton's chief persecutor, Kenneth Starr), the final report on Whitewater proved the entire affair was baseless.

But now, we have a corporate scandal involving, by comparison, vast amounts of money -- the foundation of George W. Bush's multimillion-dollar personal fortune. Now we have evidence of truly illegal dealings that date back barely a decade.  Now we have evidence provided not by grifters, con men, and political partisans, but by the members of the staff of the Securities and Exchange Commission in 1991, as well as by former executives of the Harken Energy Corporation.  Now we have the possibility that a cover-up of those findings took place in order to protect the then-President's son.

It's not simply a matter of hypocrisy, as an excellent report by Anthony York in Salon asserts, in light of Dubya's sanctimonious reaction to the Enron and WorldCom fiascos, and related scandals.

It's a matter of  corporate immorality and lawbreaking by the current resident of the White House -- and of possible efforts by that resident's father, former President Bush, to hide and then bury his son's crimes.

Until and unless the proper authorities, along with the press, investigate these serious matters with the same zeal that they investigated the patently phony Whitewater allegations, the public can have no confidence, either in them or in the Bush Administration.

Accordingly, MWO demands that current SEC Chairman Harvey Pitt be compelled to re-open immediately the SEC's investigation into George W. Bush's violations of disclosure requirements in the 1980's and 1990's and his involvement in the Harken stock-dumping scheme of 1990.

We also demand that the Senate Banking Committee and the Senate Finance Committee immediately undertake investigations into the allegations about Bush's Harken dealings, his non-disclosure problem, and the possible cover-up of these charges by members of the first Bush Administration.

Finally, we demand that the news media independently investigate all of these matters, committing at least as many resources (and here, the Washington Post and New York Times should take special note) as they did to the phony Whitewater scandal.

Email Senator Paul Sarbanes
(D-MD), Chairman of the Senate Banking Committee

Email Senator Max Baucus
(D-MT), Chairman of the Senate Finance Committee

Politely but firmly demand that their respective committees begin an official inquiry, with public hearings, on George W. Bush's infractions and possible infractions of securities laws while he was a director of Harken Energy Corporation, as well as of the possible cover-up of those infractions and improper cessation of the SEC's original investigation into these matters in 1991.

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